U.S. Farm Subsidies Dampen WTO Talks, Canada Says

SANTIAGO, Chile -- Canada's agriculture minister said Wednesday there would be little progress in the latest round of world trade talks unless the United States agrees to cut its large farm subsidies.

Canada had given lukewarm approval to a U.S. proposal earlier this year to slash farm-good tariffs worldwide to 25 percent or less from the current average of 62 percent.

Trade partners have also questioned Washington's commitment to free trade after it enacted a farm bill in May that raises subsidies for some crops and dairy products by 67 percent. Canadian Agriculture Minister Lyle Vanclief said the bill was a giant step backward and would hinder World Trade Organization talks launched in Doha last November.

"I don't think we're going to get as far as quickly as we should at the WTO until the United States agrees to some major changes," Vanclief said in Chile, where the WTO was holding poultry and meat trade talks.

Canada, a top producer of wheat and other cereals, urged Washington to practice what it preaches on trade. "The United States, in my view, is going to have a very, very difficult task in squaring the circle of what they have put in law through their farm bill versus the direction they say the negotiations should go," the minister said.

Farm goods trade, with heavy U.S. and European subsidies, is a major hurdle in the WTO round due to end in 2004.

The minister said farm subsidies generally hurt developing nation economies, adding that governments — mostly in the developed world — spend more than $300 billion a year on farm subsidies compared with $50 billion in developing nations aid.

INCREASED SUPPORT

U.S. officials have said "they're prepared to back down if everyone else backs down, especially the European Union, but they increased their support," Vanclief said.

Canadian Prime Minister Jean Chretien will take the fight against U.S. farm support programs to a summit of Asia Pacific nations in Mexico later this month.

Vanclief said some Canadian wheat farmers had been priced out of their own market by subsidies elsewhere, forcing them to shift to other grains this year. Canada, the No.2 market of U.S. agricultural products, exported 61 percent of its $15.4 billion agricultural exports to the United States in 2000.

Vanclief said in Russia last month Canada might export wheat to Iraq this year. But Wednesday he said there were no plans for commercial wheat sales between the two countries. He also said, "The only sales recently to Iraq is in the United Nations program Oil for Food. We have made no direct sales to Iraq."

Canada has been a vocal opponent of a unilateral U.S. military strike against Iraq, which President Bush says is a threat because of its weapons programs. Canada supports action only if backed by the United Nations.